IPAP 2013/14 IMPLEMENTATION PROGRESS REPORT Trade and Industry - - PowerPoint PPT Presentation

Trade and Industry Chamber Nedlac 03 October 2013 IPAP 2013/14 IMPLEMENTATION PROGRESS REPORT

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CO CORE OBJECTIVES RE OBJECTIVES O OF THE F THE IPAP IPAP

• South Africa’s long-term vision of an equitable society is provided by the

National Development Plan.

• The IPAP is informed by this vision; and its interlocking transversal and sector-

specific interventions constitute key pillars of the programmatic perspectives set out in a series of ‘drivers’ and ‘packages’ contained in the New Growth Path (NGP).

• Government policy set out in these and other documents seeks to ensure a

restructuring of the economy to set it on a more value-adding, labour-intensive and environmentally sustainable growth path. 2

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IPAP TRANSVERSAL INTERVENTIONS

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IPAP TRANSVERSAL INTERVENTIONS  Public Procurement

• Section 9.3 of the PPPFA Regulations was used to specify minimum

thresholds for the local production of DTT Antennas and Satellite DTH Dish Antennas which have been set at 100%

• The City of Cape Town has awarded the tender to provide vehicles for its

extended MyCiTi bus routes to Volvo SA. Volvo SA would provide 40 buses for the N2 express routes at a cost of R180m

• Mercedes-Benz SA‟s Sandown Motor Holdings has won the tender to

provide 134 busses for the phase 1B of JHB‟s Rea Vaya BRT system

• MAN is supplying 80 new commuter buses to Great North Transport

Limpopo‟s largest public transit operator.

• ESKOM re-advertised the SWH tender with amendments on local content

requirements (70% for the major components: tank and collector)

• The instruction notes for Solar Water Heaters and valves & actuator

products were circulated by the NT

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IPAP TRANSVERSAL INTERVENTIONS

 Public Procurement

• Minister Davies officially launched SABS Local Content Verification Office on 5 July

2013

• Renewable Energy Independent Power Producer Procurement

Programme  Department of Energy approved 19 bids in the second round.  The Solar photovoltaic sector accounts for 9 bids; wind for 7 bids; 2 Small Hydro and 1 Concentrated Solar Power (CSP).  The total preferred bidders‟ investment is estimated at R28.1 billion with a local content value of R11.8 billion and 7 385 jobs expected to be created

• Monitoring and evaluation of the performance of designated sectors

 SABS has finalised the verification framework for rail rolling stock and busses  Standard bidding documents and annexures for awarded transversal textile and clothing tenders managed by the NT have been reviewed and forwarded to SABS for local content verification.  The dti working with the South African Clothing and Textiles Workers Union (SACTWU) in following up on tenders that are not compliant to the PPPFA

• regulations. Letters to this effect have been written to affected departments and

Provincial Treasuries. 5

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IPAP TRANSVERSAL INTERVENTIONS

 Industrial Financing

• Manufacturing Competitiveness Enhancement Programme (MCEP)

 Since inception a total of 387 enterprises have been approved for funding to the value of R2.6bn.  By end of August 2013, R192.8m had been disbursed. It is expected that there will be a significant increase in disbursements, due to the enhancements made on the application and claim forms as well as the interim IT System that has been successfully tested and implemented with effect from 07 August 2013.  Entities that were approved for funding have projected an investment value of R9.5bn and 118 193 jobs to be sustained in the agro- processing, metals, chemicals, plastic, electro- technical, printing, pharmaceuticals and film sectors  The IDC has approved Projects to the value of R350 million via the MCEP loan facility; approximately R70 million has already been disbursed

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IPAP TRANSVERSAL INTERVENTIONS

 Industrial Financing

• Continuing reorientation of the IDC to finance IPAP/NGP sectors

 124 903 jobs were saved/created through IDC funding approvals 2009-2012  R12.9bn worth of approvals, expected to create/save ±14,500 jobs  R5.5bn committed for investment in the Green Economy  R1.1bn committed for investment in the agriculture & forestry value- chains  R501m approved for clothing & textiles sector – forecast to save 2,400 jobs  R5bn private „green bond‟ concluded with the Public Investment Corporation to facilitate funding for businesses looking to invest in clean-energy infrastructure developments  The IDC sourced R4 billion from the Unemployment Insurance Fund to lower the cost of capital.  Government's Green Fund, administered by the DBSA, has processed 590 applications for sustainable development projects worth R10.9bn

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IPAP TRANSVERSAL INTERVENTIONS

 Developmental Trade Policy

• ITAC has processed a variety of applications for a variety of products and some

have been implemented by SARS  Inclusion of boxer shorts under rebate item 311.40/5208.4/01.05  Reduction of duty on engine CV joints  Increase the general rate of customs duty on wire nails from 5% to 15%  Rebate provision for aluminium slugs for impact extrusion used in the manufacture of aerosol cans  Insertion of rebate item 306.01/2815.11/02.06 for Sodium Hydroxide for use in the manufacture of Sodium Metasilicates  Reduction of customs duty on polyether-polyols from 10% to free

• Fraud, Illegal Imports, Sub-standard Goods

 The new Automated Customs Management System was implemented by SARS

• n 18 August 2013 with mote 39 000 import declarations and 55 000 export

declarations processed since inception.  Since the implementation of the new system, goods with a total trade value of R40 billion moved through South Africa‟s borders with more than R2.5 billion having been collected in duties  In KZN the Electrotech Division of NRCS has stationed two permanent inspectors at the port and Durban accounted for 71.5% of the border inspections in Q1. 8

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IPAP TRANSVERSAL INTERVENTIONS

 Developmental Trade Policy

 For Q1 Electrotech conducted 277 border inspections and other border inspections were conducted at City Deep (19.9%), Port Elizabeth(6.5%) and Cape Town(2.1%)  Non-compliant products valued at R23 Million, were impounded in Durban, in addition to approximately 5,000 television sets embargoed at the Cape Town port, valued at about R2.1 Million

• A number of standards and compulsory specifications were finalised and published

 New Compulsory Specification for processed meats  Review of Compulsory Specification (VC 8043) for coal stoves and heaters and VC 9088) for shooting ranges completed.  The Legal Metrology Bill was certified and presented to Trade and Industry Portfolio Committee  Fuel cells standards have been published to date and more will be published in the next quarters  SANAS started with the development of an accreditation programme for Certification Bodies of Energy Management 9

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IPAP TRANSVERSAL INTERVENTIONS

 Competition Policy

• Various settlements on price-fixing were reached, with the following companies and

values:  R148 million with Lafarge in the cement industry  R88.5 million with FoodCorp in the wheat flour and maize-meal sub-sector;  R16.7 million with Astral Operations.  Oceana was fined R35 million for price-fixing and  Telkom was fined R649 million for market abuse  Fuel: The Commission referred the SASOL; SANS; HOSAF abuse of dominance case to the Tribunal and will be heard on the 20 May 2013  A major investigation into collusion and price-fixing in the construction industry was carried out, with a settlement reached in June 2013  Steel: Excessive pricing – Progress report finalised.  Telecommunication: Telkom fined R649m for market abuse.  A market inquiry into pricing practices in the private healthcare sector has been initiated 10

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IPAP TRANSVERSAL INTERVENTIONS

 Special Economic Zones

• The SEZ Bill undergoing parliamentary processes and expected to be

concluded by Q4

• Feasibility studies for the PGM beneficiation hub in Tubatse (Limpopo)

and Solar Corridor in Upington (NC) are underway.

• Gauteng has finalised feasibility reports for the ICT hub and undergoing

consultation process

• Technical feasibility study finalised for Dube Trade Port (KZN)
• Platinum Valley Hub: Arrangements to commence with pre-feasibility

studies on the Platinum Valley and other identified SEZ are in progress

• SEZ Capacity Building Programme has commenced with 30 officials from

dti,SARS,NT, hosting municipalities embarking on SEZ training

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IPAP SECTORAL INTERVENTIONS 1

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IPAP SECTORAL INTERVENTIONS 1

 Automotives

• The Electric Vehicle Industry Road Map was launched by Minister in May

2013

• 157 projects approved under the Automotives Incentive Scheme (AIS):

investments of R13bn; incentives of R3bn; currently sustaining 58,168 jobs

• R600m truck and bus assembly plant under development in Rosslyn, a

joint venture between Iveco SA and the Larimar group. 1,000 new jobs expected to be created

• Draft National Automotive Value Chain proposal completed for a new

manufacturing competitiveness improvement support framework.

• the dti created a "People Carrier" automotive incentive scheme for mini-

and midi-bus taxis, to grow local assembly and production

• Confirmation by Toyota SA that the new Toyota Corolla will be

manufactured at the company‟s Durban plant.

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IPAP SECTORAL INTERVENTIONS 1

 Clothing, textiles, leather and footwear

• Clothing & Textiles Competitiveness Programme (CTCP) has

stabilised sectoral production and employment:  A combined approval to date of more than R 2.1 bn has been achieved and already over R1.27 bn disbursed to the participating enterprises  To date more than 12,205 new decent permanent jobs have been created, with a further 62,085 jobs saved  The Competitiveness Improvement cluster programme has secured the participation of some notable local retailers such as Foschini & Edcon

• The National Leather and Footwear Cluster (housed under the Vaal

University of Technology) was established as a cooperative venture between Vaal, shoe manufacturers and leather tanning enterprises

• Proposal on Communal Hides beneficiation finalised undergoing

stakeholder consultations

• Proposal on the establishment of the exotic leather cluster finalised by the

consortium which includes IDC, DTI and leather goods manufacturers

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IPAP SECTORAL INTERVENTIONS 1

 Metal fabrication, capital & rail transport equipment

• New regulations on Scrap (i.e. price preferential system) was

implemented on 16 September 2013

• Minerals and Petroleum Resource Development Act (MPRDA): inclusive
• f Section 26, beneficiation provisions to support downstream

beneficiation currently subject of Parliamentary process.

• Apprenticeship

programme gazetted in April 2013 and 410 apprenticeship students enrolled under the National Tooling Initiative Programme (NTIP).

• 85 students completed on the job training and 304 students completed

phase 2

• 127 workers were trained under the National Foundry Technology

Network

• 17 new foundries have enrolled on various Competitiveness Improvement

Initiatives.

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IPAP SECTORAL INTERVENTIONS 1

 Agro-processing 1

• The Eat Safe, Eat Well, Eat Local Campaign was launched in

collaboration with Proudly South African (PSA) and other stakeholders under the umbrella of the South African Fruits and Vegetables Canning Association (SAFVCA)

• Boland Pulp has launched 8 products since the campaign
• the dti together with National Cleaner Production Centre has developed

an audit programme for the Resource Efficient Cleaning Production Programme (RECPP) for the fruit and vegetable canning industry

• R260m has been dedicated to the Small Scale milling project by Old

Mutual Masizane Fund an MoU has been signed between the DTI and Old Mutual. 24 small scale maize mills have been ordered for this project

• Since the launch of The Aquaculture Development and Enhancement

Programme:

 4 projects have been approved to the value of R189m with investment of R35.2m in Abalone and Tilapia.  292 jobs expected to be created in Western Cape and Gauteng

• 80 organic food farmers in Limpopo and KZN were trained for

participation in the retail supplier programme

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IPAP SECTORAL INTERVENTIONS 1

 Pharmaceuticals

• 50% of the total tender value of family planning tender has been awarded

to domestic manufacturers with Aspen receiving R33.14million & Fresenius –Kabi receiving R82.9 million of the tender

• R150 million loan secured from IDC for the facilitation of the Biovac

Project (manufacturing of vaccines)

• 100% of the blood fractions tender and 99.4% of the Large Volume

Parenterals tender (worth R294 million and more than R750 million respectively) were awarded to South African manufacturers

• 65% of the ARV tender (code HP-13, value R 5.8bn ) awarded to SA

manufacturers

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IPAP SECTORAL INTERVENTIONS 1

 Film industry

• “Long walk to freedom” which received support from dti was screened at

the Toronto Festival in September. The movie is to be released in South Africa in November 2013

• Other four dti-supported projects to a combined value of R31.1m (Blitz

Patrollie, Black South Easter, Kumba and Zulu) were screened at the 2013 Cannes Film Festival

• The movie Mad Max 4 - Fury Road - one of the biggest ($125m) feature

films ever brought by Warner Bros to SA - was approved and filmed in SA and Namibia, for projected release in 2014

• On the basis of sustained dti support, South Africa has already attracted a

string of locally shot blockbuster films, including Chronicle and Safe House, starring Denzel Washington and Ryan Reynolds, the 3D comic- book adventure "Dredd," and the TV drama "Mary & Martha," starring Hilary Swank

• The Adventures of Zambezia, a locally-produced animated feature film,

was selected as the closing film and received outstanding nominations. The film performed excellently at the box office, out-performing Judge Dredd; and is said to be doing extraordinarily well in Russia

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IPAP SECTORAL INTERVENTIONS 1

 Business process services

• Monyetla Skills Programme

 The National Skills Fund has approved further R71 million for the phase 4 for financial year 2013/14.  Matched funding secured from the DBSA through Jobs Fund for training of another 6000 learners T  Currently there are 26 signed consortia contracts and 1127 learners in training.  10% of the total allocation was outside Gauteng, KZN and Western

• Cape. R3.4 million has been disbursed to participating consortia thus

far

• BPS incentive

 The total amount of claims paid on the BPS incentive programme since Jan 2011 is R384 million. The sustained jobs are a total of 7,196

• SA was presented with the European Outsourcing Association (EOA)

Offshoring Destination of the Year Award

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IPAP SECTORAL INTERVENTIONS 2 & 3

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IPAP SECTORAL INTERVENTIONS 1

 Green industries

• The dti has commenced the process of small scale renewable energy

localisation strategy and wind energy localisation roadmap.

• 600 students enrolled for training at the recently launched Energy-

Efficiency Training Centre at the National Cleaner Production Centre.

• In renewable energy, the IDC approved funding for 43 projects worth R3.8

billion in green industries such as solar water heater manufacturing, with further investments set to follow in wind tower production; solar PV structures and PV panel assembly

• 1st quarter 2013: DCD, an SA-owned OEM, will begin construction of a

wind tower manufacturing facility in the Coega IDC; expected to create 628 construction jobs and 200 full-time operational jobs

• Global wind and solar power developer Mainstream Renewable Power

turned the sod on a 138MW wind energy plant in Jeffrey‟s Bay, Eastern Cape in Feb 2013

• Sun Edison South Africa broke ground on its first SA project, a 28MW

solar plant in Limpopo. This R1.2bn project will be followed by a 30MW, R1.4bn project at Witkop, near Polokwane

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IPAP SECTORAL INTERVENTIONS 1

 Advanced manufacturing

• Localisation of Manufacturing of Electrical Prepayment Meter

Manufacturing (EPPMMs) through designation within the PPPFA

 EXCO approved the designation proposal for the Residential Electricity Meters in September  A formal application to ITAC to review tariffs on prepayment meter components under way

• Software Development Process Improvement Programme

 Three entities: Barone, Budge & Dominick (Pty) LTD (in JHB), Wits Centre for Network Services (in JHB) and Maitland Group (Cape Town) undergoing training as part of the programme.  An agreement to conduct research (focusing on this project at PHD and MBA level) has been signed between Wits University and University of Cape Town

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KEY CHALLENGES

 Bunched up and sharply escalating electricity prices especially where large premiums are added by municipalities where large disparities in and between municipalities exist.  The slow recovery of the global economy, weak demand from South Africa‟s traditional trading partners and slowing demand for commodities in China.  Continued currency volatility.  Large current account deficit together with a huge manufacturing trade deficit.  Limited allocation of capital to productive sectors such as the relatively more labour-intensive and value-adding sectors of the economy.  The expeditious roll-out of the public infrastructure investment programme being driven by the Presidential Infrastructure Co-ordinating Commission (PICC) needs to be supported by robust localisation measures to ensure that the infrastructure build does not 'suck in' unnecessary imports that could impact negatively on the current account balance.  Slow progress has been registered with respect to addressing the difficult problem of the skills deficit and mismatch in the economy

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KEY CHALLENGES

 Monopolistic pricing of privately owned key intermediate inputs such as steel, plastics and polymers into the manufacturing sector continues to constitute a major constraint to downstream sector development.  Apparent limited progress with respect to the implementation of new port charges regime to favour the export of value-added goods, compounded by serious inefficiencies in rail and port freight logistics. A more speedy implementation of a commitment made by the Transnet National Ports Authority (March 2013) to change its pricing model in favour of the export of manufactured goods by lowering tariffs on tradable exports by about 40% will be of significant benefit to South African manufacturing exporters.  Non-compliance with the Designations under the amended regulations of the PPPFA by state entities and insufficient use of the mechanism provided by Clause 9(3) of the Act, which enables localisation in all tenders. Non- compliance by municipalities wrt to Designation in Clothing and Textile Sector a major concern.  Securing greater support for localisation by the private sector in key sectors especially mining to mirror developments in the CTLF sector where a quick response framework by retailers has been adopted.

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Appendix Balance on Current and Financial Account and REER

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0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00

• 80000
• 60000
• 40000
• 20000

20000 40000 60000 80000 q1 2008 q2 2008 q3 2008 q4 2008 q1 2009 q2 2009 q3 2009 q4 2009 q1 2010 q2 2010 q3 2010 q4 2010 q1 2011 q2 2011 q3 2011 q4 2011 q1 2012 q2 2012 q3 2012 q4 2012 q1 2013 q2 2013 Balance on current account (Rm) Balance on fin account (Rm) REER (Index 2000=100)

Source: SARB

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Appendix Trade Balance (US $ million)

• 8000
• 6000
• 4000
• 2000

2000 4000 1Q1990 3Q1990 1Q1991 3Q1991 1Q1992 3Q1992 1Q1993 3Q1993 1Q1994 3Q1994 1Q1995 3Q1995 1Q1996 3Q1996 1Q1997 3Q1997 1Q1998 3Q1998 1Q1999 3Q1999 1Q2000 3Q2000 1Q2001 3Q2001 1Q2002 3Q2002 1Q2003 3Q2003 1Q2004 3Q2004 1Q2005 3Q2005 1Q2006 3Q2006 1Q2007 3Q2007 1Q2008 3Q2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 1Q2012 3Q2012 1Q2013 Agriculture Mining Manufacturing

Appendix Manufacturing trade deficit: June 2012 to June 2013 (Rand million)

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• 12000
• 10000
• 8000
• 6000
• 4000
• 2000

Jun2012 Jul2012 Aug2012 Sep2012 Oct2012 Nov2012 Dec2012 Jan2013 Feb2013 Mar2013 Apr2013 May2013 Jun2013 Machinery & equipment Motor vehicles, parts & accessories Coke & refined petroleum products

Appendix Manufacturing trade surplus: June 2012 to June 2013 (Rand million)

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2000 4000 6000 8000 10000 12000 14000 16000 Jun2012 Jul2012 Aug2012 Sep2012 Oct2012 Nov2012 Dec2012 Jan2013 Feb2013 Mar2013 Apr2013 May2013 Jun2013 Basic iron & steel Basic non-ferrous metals Beverages

Appendix PMI January 2009 to August 2013

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0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

Source: Economist

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Appendix Manufacturing Employment („000)

1110 1120 1130 1140 1150 1160 1170 1180 1190 1200 1210 q3 2009 q4 2009 q1 2010 q2 2010 q3 2010 q4 2010 q1 2011 q2 2011 q3 2011 q4 2011 q1 2012 q2 2012 q3 2012 q4 2012 q1 2013 q2 2013

Source: Stats SA

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